Foreign direct investments (FDI) played a central role in supporting the efforts of Asia-Pacific countries to build more sustainable development practices, according to a report released by the United Nations Economic and Social Commission for Asia and the Pacific (Unescap).

In the report Asia-Pacific Trade and Investment Report (Aptir) 2012, Unescap said that the region has shown resilience in the face of recent economic crises and continued to attract FDI flows.

The UN commission reported that the Asia- Pacific region, including the developed countries, attracted 33 percent of global FDI inflows in 2011, which recorded a considerable increase from an 18 percent share in 2005.

“Stable growth in FDI inflows to the region over the past two years has allowed the Asia-Pacific region to recover from the slump in FDI inflows caused by the global financial crisis, and to exceed the pre-crisis peak of 2008,” it noted.

Unescap also stated that in 2011, following the global trend, FDI to developed countries in the region grew more than FDI to the developing countries.

The UN commission also projected that from a disappointing performance in 2012, the Asia-Pacific’s economic growth is expected to pick up in 2013, adding that the said growth would attract additional FDI inflows for the region.

However, it also warned that the revival can be derailed by any of these three threats: a deepening recession in Europe; volatile capital flows; or a marked slowdown of the Chinese economy.

The Unescap report also pointed out that five Asia-Pacific economies such as China, Hong Kong, Russia, Singapore and India stood out in attracting FDI inflows.

Biggest recipient
The commission mentioned that of the five “FDI giants,” China holds the top position not only regionally, but also globally as it surpassed the United States to become the largest destination for global FDI inflows in the first half of 2012.

On the regional level, the report observed that China attracted a quarter of the inflows coming to the Asia-Pacific region in 2011.

Hong Kong accounted for a 16 percent share, followed closely by Singapore and the Russia with shares of 13 percent and 10 percent, respectively.  India attracted 6 percent of total FDI inflows to the Asia-Pacific region.

It further said that the Asia-Pacific developed countries as a group accounted for 8 percent of total FDI inflows. However, these inflows can be mostly attributed to Australia.

Meanwhile, the Unescap report noted that the role of least developed countries remains marginal with less than 1 percent of inflows going to these countries.

“This indicates the need for the countries to further improve their attractiveness as investment destinations,” it stated.

On the other hand, the report also cited the important role of the developing countries in the Asia-Pacific region as sources of FDI outflows.

“Globally, the Asia-Pacific developing countries supply one fifth of total outflows and, on the regional level, their share rises to more than two thirds,” it said.